More Indonesian millionaires are looking for a second home in London, apart from the current most popular destination, Singapore, a recent study by Knight Frank shows.
“Interest from Indonesian-based purchasers in London property increased by over 100 percent last year. Indonesia moved up two places last year in Knight Frank’s rankings of Asian buyers in London from 11th in 2010 to 9th position,” said Knight Frank Asia Pacific Research Manager, Nicholas Holt on Wednesday.
According to Holt, one of the reasons why rich Indonesians are interested in buying second homes in prime central London is the weakening value of the British pound against the rupiah over the past few years. The pound has weakened from approximately Rp 18,000 in 2009 to Rp 14,000 in 2012.
“This has made London property relatively cheaper for Indonesians,” Holt told The Jakarta Post.
The typical property bought by Indonesian buyers in London is new-build, with an average value of GBP 375,000 ( US$597,212 ).
Most Indonesian buyers also saw London as a safe-haven investment. Demand outstripping supply is also one of the reasons why London has become one of the main destinations for Indonesian investors. London is expected to see 374,110 new households by 2020, while the number of current residential units with planning permission is 214,825 and units under construction is 43,357.
The study found that Singapore remains the most preferable location for Indonesian-based property buyers. The newly implemented additional buyer’s stamp duty ( ABSD ), however, will have an effect on property interest.
In December 2011, the Singapore government imposed ABSD for private property and foreigners will have to pay 10 percent of ABSD on any purchased property.
“Even though developers will be absorbing some of the ABSD and the burden will not fall completely on the purchasers, it will still have an affect on the number of transactions,” Holt said.
According to Knight Frank, Indonesians are among the top three property buyers in Singapore after China and Malaysia. In 2011, Indonesians bought 1,714 properties in Singapore. In the first quarter of 2012, the number was 137.
“In high-end properties, those priced $1 to $ 5 million, Indonesian purchasers are ranked second. In fact, we estimate that Indonesians spent Rp 15 trillion ( US$1.6 billion ) on property in Singapore in 2011,” he said.
The study also shows that Indonesian residential property prices ranked 60th, with Kuala Lumpur and Bangkok ranked 57th and 51st respectively, in the Prime International Residential Index 2012. Prime residential property in Jakarta costs $2,900 per square meter, while in Kuala Lumpur the price is $5000. ( nad )